Assessment framed u/s 144 by issue of notice u/s 142(1) was void as time limit for filing ITR u/s 139(4) was over and it was a case of income escaping assessment
In a recent judgment, ITAT Agra held that and assessment framed u/s 144 based on notice u/s 142(1) was void ab initio as once that time limit u/s 139(4) is over and the assessee has not filed any return, it becomes a case of income escaping assessment and notice could have been issued by the AO u/s 148.
ABCAUS Case Law Citation:
4859 (2025) (11) abcaus.in ITAT
In the instant case, the assessee had challenged the order passed by the CIT(A) in confirming the order of assessment passed by the Assessing Officer (AO) u/s 144 of the Income Tax Act, 1961 (the Act).
Before the Tribunal the assessee a preliminary legal ground that the impugned assessment ought to have been framed u/s 147 of the Act after reopening the assessment instead of assessment u/s 144 of the Act. It was prayed that the issue goes to the root of the matter and hence, be address first.
During the relevant Assessment Year, the assessee had deposited cash in his bank account. The assessee had not filed his return of income. In pursuance to an unsigned notice issued u/s 142(1), the assessee filed his return of income declaring income under presumptive basis u/s 44AD of the Act along with interest income.
The assessment was completed u/s 144 of the act by making addition u/s 69A read with section 115BBE of the Act on account of cash deposits made during demonetization period in specified bank notes for want of noncompliance to the show cause notice issued u/s 142(1) of the Act by the AO.
The Tribunal observed that the return filed by the assessee in response to notice under section 142(1) was beyond the time limit prescribed u/s 139(4) of the Act. Hence, the provisions of Explanation 2(a) of Section 147 of the Act had been activated. Accordingly, in order to frame any assessment, the AO should have issued notice u/s 148 of the Act on the assessee in the manner known to law, then proceed to frame the reassessment u/s 143(3)/ 144 r.w.s. Section 147 of the Act.
The Tribunal further noted that this issue had come up for adjudication by the coordinate bench of Hyderabad Tribunal which held that once that time limit u/s 139(4) is over and the assessee has not filed any return, it becomes a case of income escaping assessment and for that issuance of notice under section 148 is a must.
The Tribunal held that since in the instant case the assessment had been framed u/s 144 of the Act based on unsigned notice u/s 142(1) notice and no reassessment u/s 147 of the Act had been framed, the entire assessment became void ab initio and accordingly requires to be quashed.
Accordingly the entire assessment was quashed and grounds raised by the assessee were allowed.
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